Cultural Conflict and Merger Failure: An Experimental Approach
California Institute of Technology - Division of the Humanities and Social Sciences
Roberto A. Weber
University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)
USC CLEO Research Paper No. C01-10
We use laboratory experiments to explore merger failure due to conflicting organizational cultures. We introduce a laboratory paradigm for studying organizational culture that captures several key elements of the phenomenon. In our experiments, we allow subjects in "firms" to develop a culture and then merge two firms. As expected, performance decreases following the merging of two laboratory firms. In addition, subjects over-estimate the performance of the merged firm and attribute the decrease in performance to other subjects rather than to situational difficulties created by conflicting culture.
Number of Pages in PDF File: 36
Date posted: August 16, 2001